U.S. consumers’ inflation expectations remain elevated, NY Fed survey finds

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(Businesshala) – US consumers raised their short- and medium-term inflation expectations again in September, but they downgraded their views on how much home prices, fuel costs and other expenses will rise next year, According to a survey released. Tuesday by the New York Federal Reserve.

Average expectations for what inflation will be next year rose for the eleventh consecutive month to 5.3%, the highest level since the survey began in 2013. Expectations of what inflation would be in three years rose to an average of 4.2%. It also reached another series high, up from 4.0% in August.

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The latest gauge of consumer expectations comes as Fed officials are trying to understand whether pandemic-induced high inflation has lasting power — which may require a policy response — or if it will subside on its own.

A separate blog post published by the New York Fed last month found that long-term inflation expectations this year remain well placed, compared to two years before the pandemic.

blog post – Here

Fed Chair Jerome Powell said the central bank could start reducing its asset purchases as early as November from the current $120 billion a month. Policymakers have set a high bar for raising interest rates and are divided on when they expect rates to rise, with nine out of 18 Fed officials saying at a September meeting that they would start the first rate hike early next year. expect growth.

The September survey, which is based on a rotating panel of 1,300 households, showed consumers lowered their expectations of how much some essential spending would increase in the near term.

The price of gas is expected to average 5.9% next year, down “sharp” from 9.2% in August. Expected home prices fell for the fourth month in a row, with consumers now expecting prices to rise by 5.5% next year, down from 5.9% in August.

Reporting by Zonal Marte; Editing by Chizu Nomiyama

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